That’s the price of iron ore it likely needs to stave off another cash crisis that saw management go cap in hand to lenders for US$4.5 billion so it could renegotiate some of its debt, as well as shield its ambitious production plans in Australia’s Pilbara region from further cutbacks.

Credit ratings agency Moody’s Investors Service says as long as the price of the steel-making ingredient remains at US$95 a ton or higher, Fortescue should have the muscle to push ahead with its aggressive expansion program. This involves spending US$4.6 billion on development projects this fiscal year.

Fortescue Metals Group Ltd. is hoping a US$4.5 billion credit facility, underwritten by Credit Suisse and J.P.Morgan, will be enough to alleviate investor concern over its debt burden.

Proceeds from the five-year facility will be used to refinance existing borrowings which were in danger of breaching covenants, while further funds could be received by entertaining approaches from a range of parties interested in certain asset partnerships.

Melbourne-based Pengana Capital fund manager Tim Schroeders, a former shareholder, said the new underwritten facility symbolizes the fact that banks haven’t given up on the iron-ore producer.

Fortescue Chairman Andrew Forrest clearly sees a silver lining in iron ore prices falling to a two-and-a-half year low near US$90 a ton: the chance to snap up stock in the company he founded cheaply.

According to a filing on the Australian Securities Exchange, Mr. Forrest paid 18.5 million Australian dollars (US$19.1 million) for five million shares in Fortescue on Aug. 29. It comes two days after he spent A$20.1 million to buy a similar number of shares on market.

Mr. Forrest’s move to lift his holding to around 32.8% comes as shares in Fortescue — the world’s fourth-largest iron ore miner by output — trade at three-year lows.

Western Australia’s bold plans for new ports to export iron ore are in trouble. So, a review of capacity at Port Hedland’s existing harbor has sent a strong signal on which companies will be the big winners if demand and prices of the steelmaking material stabilize.

Atlas Iron Ltd. bolstered its appeal as a takeover candidate by securing the same rights as bigger rivals like BHP Billiton Ltd. and Fortescue Metals Group to make use of spare capacity at Port Hedland, Australia’s biggest iron ore port.

Its success contrasts with peers such as Aquila Resources Ltd. and China-backed Sinosteel Midwest Corp., which are constrained by existing port bottlenecks and need major new developments like Anketell Point and Oakajee to go ahead to secure a step change in iron ore sales.

Fortescue Metals may need lenders with deeper pockets than it first thought.

Fortescue requires iron ore prices to reverse course or it may have to raise as much as US$2.6 billion to fund its expansion plans in Western Australia, says Goldman Sachs.

That would be more than double the US$1 billion that Fortescue — Australia’s third-largest iron ore miner after BHP Billiton and Rio Tinto — said last month it will seek to raise by the end of this year after a detailed review of major new projects forced the company to revise its infrastructure budget higher.

Fortescue Metals Group said Tuesday that its founder and chairman Andrew Forrest has lifted his stake in the company, Australia’s third-largest iron-ore producer.

Mr. Forrest bought 12.8 million ordinary shares in Fortescue at a value of 62 million Australian dollars (US$62 million). The purchases by Mr. Forrest, who now owns 995.7 million shares in Fortescue, or 32% of the company, were made between June 20 and June 25 in on-market trades, the company said in a statement to the Australian stock exchange.

People familiar with the matter said Morgan Stanley attempted to buy 60 million shares on behalf of an unnamed client at A$4.90 a share late Monday but failed to secure sufficient institutional support.

Bank of America-Merrill Lynch says a combination of the two companies would be in a sweet spot feeding rapidly growing economies like China and India with iron ore and coking coal. But there’s a hitch: Teck and Fortescue’s biggest shareholders may get in the way.

Merrill has done some back of the envelope number crunching on a possible merger in the wake of reports that Canada’s Teck has quietly acquired a small equity stake in Australia’s Fortescue as part of its strategy of bulking up in iron ore production.

About Deal Journal Australia

Deal Journal Australia is an up-to-the-minute take on the deals and deal makers that shape the Australian landscape, including mergers and acquisitions, capital raisings, private equity and debt markets. In short, wherever money changes hands. Deal Journal Australia is updated throughout each trading day with exclusive commentary, analysis, data, news flashes and profiles. The Wall Street Journal’s Gillian Tan is the lead writer, with contributions from other Journal and Dow Jones reporters and editors. Send news items, comments and questions to gillian.tan@wsj.com.

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